We recently published a list of 10 AI News You Can’t Miss. In this article, we are going to take a look at where Shopify Inc. (NYSE:SHOP) stands against other AI news you can’t miss.
The AI stocks selloff that started following the launch of DeepSeek is still impacting the US markets. Aswath Damodaran, NYU Stern School of Business professor of finance, said in a recent program on CNBC that he believes innovation in AI technology like DeepSeek and new models would “commoditize” AI products and could result in lower spending.
“In my view, what it does is reduce the total size of the segment of the AI market that needs high-power chips and immense amounts of data. Whether deep seek is a fake or whether it’s going to pass by, what it opens people’s eyes to is that not all AI products and services need these incredibly powerful chips and huge amounts of data and huge data centers. You can get there with much cheaper devices. I think for many companies, when they look at the AI products and services they have to develop, they don’t need this high-powered stuff. They don’t need to spend the tens of billions of dollars up front. So, I think that’s the real worry you have to have.”
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For this article, we picked 10 stocks trending based on the latest news. For each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
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Shopify Inc. (NYSE:SHOP)
Number Of Hedge Fund Investors: 64
Chris Wang from Runnymede Capital explained in a latest program on Schwab Network how Shopify Inc (NYSE:SHOP) is using AI to its advantage.
“They are developing a lot of AI tools for their merchants. They’ve heavily invested in AI with Shopify Magic and Shopify Sidekick. And as you can see, their operating efficiency is really improving each and every quarter. So I think the AI tools are benefiting not only their customers but also their bottom line. So AI is just doing great things for Shopify.”
For the first quarter, Shopify expects revenue growth at a mid-twenties percentage rate year-over-year, reaching about $2.31B (+25% YoY) and estimated operating income of $190M (+120% YoY). The company expects to see accelerated top- and bottom-line growth at a CAGR of +22.6%/ +25% through FY2027. This compares to previous estimates of +17.8%/ +14.2%, and reflects a strong history of 5-year growth at +41.3%/ +111.2%, highlighting SHOP’s promising long-term outlook. This growth is supported by the projected rise in the e-commerce SaaS market size from $9.4B to $29.82B by 2032 at a CAGR of +15.5%.
Rowan Street Capital stated the following regarding Shopify Inc. (NYSE:SHOP) in its Q4 2024 investor letter:
“Shopify Inc. (NYSE:SHOP): Investment Initiated: February 2022
Internal Rate of Return (IRR): 23%
Our IRR for Shopify aligns closely with the growth in revenues and gross profits the company has delivered over the past three years since we first purchased it in February 2022 (as shown in the table below). However, the path to achieving this return has been far from smooth-as is often the case with investments.
In fact, for the first 2.5 years of holding Shopify, our position generated little to no return. Nearly all of the gains have come within the past six months. This illustrates a fundamental principle of long-term investing: the longer your holding period, the more closely your returns will reflect the underlying fundamentals of the business…” (Click here to read the full text)
Overall, SHOP ranks 8th on our list of AI news you can’t miss. While we acknowledge the potential of SHOP as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SHOP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.